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Deposits are the biggest obstacle for first home buyers - Westpac
Topic Started: 14 Aug 2017, 08:35 AM (417 Views)
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Westpac's George Frazis says deposits are the obstacle for first home buyers

Westpac's head of consumer banking, George Frazis, says saving a deposit is one of the biggest challenges facing first home buyers and lenders should do more to help young people save the initial payment they need to get onto the property ladder.

Mr Frazis, who identified housing affordability as a major social issue when he started in the job two years ago, warned against moves to dampen house prices.

"This whole notion that you want a system where house prices drop is flawed. It is over $7 trillion in terms of an asset class. If that loses value, it would destabilise the economy," Mr Frazis said in an interview with The Australian Financial Review.

"This is not about prices going down, this is about ensuring that those who find it difficult to raise a deposit have avenues into getting into home ownership."

While the focus of the housing affordability debate has been on soaring property prices, Mr Frazis said important issues like supply, transport links and finding ways to help people who could afford the repayments into the market had been overlooked.

He said the property debate overlooked the challenge many young people faced getting the deposit to buy a home, even if they could easily afford the repayments.

This was being exacerbated by low wages growth and rising living costs.

"This is not an issue of not being able to afford a house once you have got it but this is about being able to afford a deposit. There are restrictions around that and as prices went up and up, you had to save more. That impacted younger Australians," Mr Frazis said.

Westpac will on Monday release research showing 62 per cent of first home buyers are not positive about their financial future. The Westpac research found 67 per cent of respondents blamed the high price of housing as the main obstacle to buying property. But 53 per cent said saving for a deposit was also a major hurdle.

The study of 2000 Australians aged from 20 to 70 in March and April this year found 71 per cent wanted the government to intervene to tackle housing affordability and 43 per cent wanted to access their superannuation to fund a deposit. More than half the respondents said the government should suspend stamp duty for first home purchases.

There is evidence though that first home buyers are coming back into the market. ABS statistics released last week showed loans to owner-occupiers rose to 9573 during June, the largest increase since October 2014. First time buyers accounted for 15 per cent of total owner occupier loans issued in June, recovering from a record low of 12.9 per cent in March 2016.

Read more: http://www.afr.com/business/banking-and-finance/westpacs-george-frazis-says-deposits-are-the-obstacle-for-first-home-buyers-20170812-gxux31
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